Special counsel may probe Cisneros

WASHINGTON -- In another blow to the prestige of the Clinton administration, Attorney General Janet Reno recommended yesterday that a special prosecutor be appointed to investigate Henry G. Cisneros, the secretary of housing and urban development.

Mr. Cisneros, after speaking with President Clinton, told reporters at HUD headquarters that he would "stay and fight," dispelling speculation that he would resign as HUD secretary while battling charges that he lied to FBI agents about payments he made to a former mistress.

"I'm convinced that the independent counsel will conclude that I did not engage in criminal wrong doing," Mr. Cisneros said, standing beside his wife and his lawyer.

FBI officials, including Director Louis Freeh, maintained that Mr. Cisneros violated the law when, during his government background check, he told FBI agents that he had paid his former lover, Linda Medlar, no more than $10,000 a year to support her and her child -- with no payment exceeding $2,500.

"Information provided by Secretary Cisneros concerning his payments to Medlar was false," Ms. Reno stated in an affidavit filed with a panel of federal appellate judges who will select an independent counsel to determine whether criminal prosecution of Mr. Cisneros is warranted.

"In fact, he paid her more than $2,500 at various times, and his total annual payments to her were between $42,000 and $60,000," the affidavit said. "Mr. Cisneros' statement was made to the FBI soon after he made a payment to Medlar that was substantially larger than $2,500."

This will be the third independent counsel investigating top Clinton administration officials.

Mr. Clinton's own business dealings in the Whitewater land development case are being investigated. Another prosecutor is examining former Agriculture Secretary Mike Espy's acceptance of gifts from businesses regulated by his department.

In addition, the Justice Department is examining whether special counsels should be appointed to investigate the business dealings of Commerce Secretary Ronald H. Brown and Transportation Secretary Federico F. Pena.

When Mr. Clinton took office he vowed to run the most ethical administration in history. Last week, he complained about the low level of evidence required for the naming of a special prosecutor and wondered aloud, as have previous presidents, whether talented people still will want to come to Washington.

Yesterday, Mr. Cisneros did not address those larger issues, but he calmly asserted: "I regret any mistakes that I have made, but affirm once again that I have at no point violated the public's trust."

He took no questions, and White House officials dealt gingerly with two issues raised by this episode: Does President Clinton expect his appointees to tell the truth during the background-checking process? And, why did Mr. Cisneros mislead the FBI?

A White House official, speaking on condition of anonymity, speculated that Mr. Cisneros had misled the FBI about the amounts he gave Ms. Medlar because his wife, who knew of the extramarital affair, did not know the size of the payments.

Mr. Clinton's spokesman, Mike McCurry, amplifying on that point, said last night that the president has "admiration" for Mr. Cisneros' efforts to "keep his family together."

The president also issued a statement lauding Mr. Cisneros' service at HUD and describing him as "a man of integrity and character."

Mr. McCurry said that Mr. Cisneros called the president yesterday afternoon and offered to resign. But the HUD secretary didn't want to resign -- and the president didn't push him to, officials said.

Mr. Cisneros, a former mayor of San Antonio and a hero in the Mexican-American community in the Southwest, was once thought to be a rising star in the Democratic Party. At age 37, he was among those interviewed by the 1984 Democratic presidential nominee, Walter F. Mondale, as a potential running mate.

But Mr. Cisneros' Texas political career was derailed by the same episode that resulted in Ms. Reno's call yesterday for a special prosecutor -- his affair with Ms. Medlar, a former political fund-raiser.

Returning to public life as a member of the Clinton administration, Mr. Cisneros found new problems -- the release of telephone conversations Ms. Medlar had secretly taped over a four-year period.

On the tapes, sold by Ms. Medlar to NBC's "Inside Edition" last year for $15,000, the two discuss payments Mr. Cisneros made to Ms. Medlar from 1990 until the middle of 1993.

Yesterday's statements by both Mr. Cisneros and Ms. Reno reveal that each side believes Mr. Cisneros' fate could come down to a single word in the law.

The statute in question makes it a misdemeanor to make a "material false statement" to the FBI -- that is, one potentially capable of altering the outcome of a decision, such as a Senate confirmation. The focus on this case, both sides suggested, will be on that word "material."

Mr. Cisneros' lawyer, Cono Namorato, argued that any misstatements were not material because the precise amount would not have stopped Mr. Clinton from nominating him or the Democratic-led Senate from confirming Mr. Cisneros.

One White House official said that Mr. Cisneros sought guidance from Mr. Clinton and the president basically told him: 'If your instinct is to fight it, we should fight it.' "